Regulations and established rules dictate how financial instrument market centers, including securities market centers, must interact with one another and, specifically, how orders are to be handled among market centers. Some present market center rules and regulations for some markets dictate that when an order is placed on a market center, it is to be executed at the best bid or offer price presently available in the entire market (“Market Best Bid” or “Market Best Offer”), regardless of whether the market center that the order was sent to is presently offering the best bid or best offer price. If a market center receives an incoming marketable order (i.e. an order whose price is at or better than the opposite side Market Best Bid or Best Offer price) and cannot match that order within its own order book, then that market center must route all or part of the order to the market center then presently posting the Market Best Bid or Best Offer price.
While these rules and regulations are designed to give a securities trader the benefit of having his order executed at the best price available in the market at the time, traders sometimes want their orders only executed on the market center to which they sent the order, trading off speed of execution versus best price. These traders do not want their orders to leave the market center to which it was sent. Traders can make this request as long as their order does not lock or cross the away market. A trader's order would lock the away market if the trader's order price has the same price as the Market Best Bid or Best Offer price then available on the opposing side of the market (i.e. the trader's buy order price is equal to the Market Best Offer price or the trader's sell price is equal to the Market Best Bid price). A trader's order price would cross the away market if a trader's buy order price is higher than the Market Best Offer price or if a trader's sell order price is lower than the Market Best Bid price.
In prior systems, if a trader's market center-restricted order locked or crossed the away market, it was typically canceled. Traders in such systems typically had to choose between pricing an order aggressively to maximize trading opportunities or risk having the order cancelled because the trader had priced it through the market (i.e. priced it so that it would lock or cross the away market).
Accordingly, there is a need for a market center order processing method and system where a trader can designate that an order only execute on a specific market center and that order will only re-price more aggressively than its current posted price and not fade from its current posted price as prices on an away market move to or through it.